Financial advisors counting on an industry pact to switch jobs safely with clients in tow could run into obstacles after a ruling by a Georgia state court last week.

The decision, involving advisors who jumped to Morgan Stanley from Aprio Wealth Management LLC in 2014, holds that those who agree to give their employers advance notice before quitting aren’t absolved of that duty by the terms of the industry accord. It could complicate job changes for many U.S. brokers and registered investment advisors who work at firms that are members of the Protocol for Broker Recruiting.

“You can assume this decision’s going to be cited a lot, in Finra and in court,” said Dennis Concilla, an attorney who runs a website that tracks the protocol, referring to the Financial Industry Regulatory Authority.

The protocol was drafted by a group of large securities firms in 2004 to cut down on litigation costs and allow advisors to switch employers and bring clients along -- as long as they take only the clients’ names, addresses, phone numbers, email addresses and account titles. It has been widely regarded as offering safe passage to departing advisors who follow its guidelines.

But, in what appears to be the first case in the nation to address the matter, presiding judge Christopher McFadden of the Court of Appeals of the State of Georgia ruled on June 27 that “the protocol does not categorically invalidate notice provisions in employment agreements.”

‘Protected From Poaching’

While the state-court ruling applies only in Georgia, other courts and industry panels could refer to it in ruling on similar cases. State employment laws vary widely, with some, like California’s, severely limiting employers’ ability to enforce restrictive agreements.

Protocol members include both broker-dealers, which are required to bring disputes to Finra arbitrators, and registered investment advisors, which are regulated by the Securities and Exchange Commission and can take disputes to court. Concilla said he doubts Finra would enforce advance-notice provisions as the Georgia court did.

“We’re really pleased with the court-of-appeals ruling on this case,” Aprio Chief Executive Officer Richard Kopelman said. “We think it’s a very meaningful decision for small and midsize firms, especially for registered investment advisors that can feel confident they’ll be protected from poaching like happened to us.”

Through a spokeswoman, Morgan Stanley declined to comment.

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